Burns treatment facility settles charges for $9.25M

The owners of a Burns drug treatment facility have agreed to pay $9.25 million to the state and federal government to settle charges that they defrauded the TennCare program and provided substandard care to patients referred to them over a six-year period.

The settlement announced Wednesday stems from a whistleblower suit filed by a former employee of the New Life Lodge three years ago.

Company officials said in a statement released Wednesday afternoon that “all parties agreed that allegations in the lawsuit have been neither proven nor disproven.” They also said that none of the charges in the lawsuit applied to the care of their current patients.

“We dispute the validity of the allegations in the lawsuit, but to avoid the distraction that a protracted legal process would provide, we have agreed to settle this suit,” the statement said.

The state of Tennessee had charged that New Life, owned by California-based CRC Health, billed for services that were not medically necessary and filed claims for services that were never provided.

According to the 18-page settlement agreement, the state will get $4.2 million while the federal government will get a little over $5 million. Both the state and federal government will pay the whistleblower, Angela Cederoth, a total of $1.5 million. CRC also agreed to pay $137,500 to Cederoth’s lawyers.